Previous Quarterly Editions
Expropriation Risk: 56 56 54 51 Political Violence Risk: 58 64 59 55 Terrorism Risk: 35 34 34 34 Exchange Transfer and Trade Sanction Risk: 36 35 36 36 Sovereign Default Risk: 45 47 46 45
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Making his first public appearance since suffering a stroke in October 2018, President Ali Bongo Ondimba attended the country’s Independence Day celebrations in August. He appeared at a military parade in Libreville and, although walking with a cane, was able to climb stairs to his seat in the reviewing stand unaided. His previous appearances have only been on television, most recently a pre-recorded address broadcast in June that called for accelerated reform and greater efforts to tackle corruption. Pressure had been mounting on the government to reveal more about the president’s condition. In July, the country’s main trade union confederation suggested, without citing evidence, that the president had died, after which several of its officials were arrested. The leader of the opposition Gabonese Patriotic Front (FPG) was subsequently detained after accusing several members of the Bongo family of “manipulating” the president. His appearance in Libreville on August 17 came less than two weeks before the court of appeal was due to hear a petition from a range of political groups for a medical assessment of the president’s competency to remain in office. Some critics have called for amending the constitution to add tougher criteria for judging whether a head of state is properly fulfilling presidential functions, using this as another way of criticising Bongo’s retention of power. Meanwhile, the process of government has continued in his absence, and there was a cabinet reshuffle in June as Prime Minister Julien Nkoghe Bekalé gave key portfolios to presidential allies. The British-born ecologist Lee White became minister for forestry after his predecessor was sacked following the discovery that a large supply of kevazingo, a precious wood species, worth several million euros was illegally destined for China. This affair was politically sensitive given the emphasis that Bongo has laid on forest conservation and may partially explain the blunt comments in his June address about the damage done by corruption. Debates over political reform have cooled since the victory of the ruling PDG in the October 2018 legislative elections, but the government still faces a range of political pressures. Consumers complain about unreliable power and water supplies, protests forced the delay of reforms of student grants, and retired people protested when the government moved to resume the paying of pensions quarterly instead of monthly. When Bekalé invited trade unions to discuss the austerity measures sought by the IMF he faced protests from teachers, some of whom have endured years without salary payments. The government sees development of the oil sector as the main hope for the economy and, after lengthy preparations, its new petroleum code was unveiled in July. The new oil minister, Noël Mboumba, highlighted the extent to which the tax burden on the sector has been lowered, with the 35% corporate tax on profit reduced to zero and the exploration royalty minimum rate cut from 9% to 5%.
The government and Veolia have reached an amicable settlement over the 2018 expropriation of the French group’s 51% stake in national power and water utility SEEG. Under the terms, reached through international arbitration, Veolia is transferring its stake to the state for an undisclosed sum. The government has taken pains to indicate that Veolia was an exceptional case that did not presage further expropriations, and its protracted experience in this case will confirm a reluctance to repeat it. More importantly, the government priority now is to attract new exploration investors into the oil sector and it will be keen to avoid generating any anxiety. Two exploration contracts signed with Petronas in August were the first such major contracts in five years, while both Shell and Total have actually sold their assets in Gabon to Assala Energy and Perenco, respectively. The new Petronas contracts appear to vindicate the government’s decision to soften its fiscal regime for the sector in a bid to stimulate more hydrocarbons exploration. The new oil minister says that the bidding round launched in November 2018 will remain open until January 2020 and has indicated that Gabon plans to re-join the Extractive Industries Transparency Initiative. This move would reassure firms that are subject to tough corporate governance standards in their home countries.
The government quickly overcame the lacklustre attempt at a military coup at the start of the year. The president’s public appearance in August should help it respond to opposition complaints that the regime is not fully transparent about who is taking the key decisions in his absence, but the expectation of further evidence of his recovery will increase. Sporadic civil protests over socio-economic grievances will continue but are not likely to slide towards more serious confrontation so long as the state maintains its relatively tolerant approach.
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Experience elsewhere in the region suggests that the large western expatriate population in Libreville could be seen as a target by terrorists. However, no public evidence of local jihadist groups has emerged, and there are no indications that international groups are trying to gain a foothold in the country.
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Gabon is a member of the six-country Central African franc (CFA) bloc of the Central African Economic and Monetary Union (CEMAC). The currency’s fixed parity to the euro is guaranteed by the French treasury, ensuring its ready convertibility. In contrast to the West African CFA bloc, CEMAC is poorly placed to move towards monetary independence in the near future because many of its members are struggling with debt problems. The IMF believes that the current system remains viable but it will need member governments to pursue tough financial stabilisation measures.
Gabon is finally tackling its high debt-to-GDP ratio and the IMF has been encouraged by the government’s performance under the three-year Extended Fund Facility programme agreed in 2017. This is worth 640 million dollars and was designed to help Gabon adjust to the impact of lower oil prices. However, the requirement to cut the public sector wage bill by 10% remains a challenge for a government whose authority has been weakened by the president’s absence.
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